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British American Tobacco UK Pension Fund
British American Tobacco UK
Pension Fund
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Running the Fund
Christian Hardy, Fund Actuary
The management of pension schemes has changed considerably since
the BAT UK Pension Fund was launched. The Fund is now run just like a
business. Two main Committees have been set up to manage investments,
Fund governance and compliance with legislation, and taking decisions on
the provision of benefits in the event of death, incapacity or ill-health. There are also special
sub-committees to address certain issues between meetings. The strategy, policies and
procedures related to the running of the Fund are all documented to demonstrate clearly that
it is run according to its governing principles and legal requirements. There has also been
an increasing focus on transparency in the way pension schemes are run. The Trustee Board
sets objectives which are brought together in a business plan against which it measures
its progress on a regular basis. The Trustee must also carefully document any decisions it
makes in relation to the running of the Fund.
Maria Crellin, UK Pensions Manager
One of the main aims of recent pensions law has been to improve the
management (or ‘governance’) of pension funds. In doing so it recognises that
the efficient running of a pension fund depends largely on the knowledge and
understanding of trustees. There is a formal requirement for Trustee Directors to
be able to demonstrate that they have a required level of knowledge and understanding both
about pensions in general and specific knowledge about their scheme. If necessary, they may
need to undertake special training to make sure they are brought up to scratch.
Panos Antonakakis, Member elected Trustee Director and
active member of the DC Section
I didn’t fully appreciate the complexity of the work of a Trustee Director before
I applied to become one, and I’ve been impressed with the level of expertise
of the Directors of the Trustee Board. Making sure we meet the letter as
well as the spirit of the law is a major challenge for Trustee Directors. For starters, we are
responsible for making sure that your interests are protected. As your pension benefits are
subject to a strict set of rules, it is our job to make sure these rules are followed at all times.
The strength of the covenant/looking to the future
David Potter, Company appointed Trustee Director
The strength of the employer covenant can be seen as the ability and
willingness of the Company to continue to support the Fund and is therefore a
key element in protecting members’ benefits. While the Trustee Board regularly
monitors the covenant strength, utilising information from a variety of sources,
recently it also undertook a full review of the process for assessing and monitoring the
covenant. As part of this, an independent assessor also reviewed the process, concluding
it is well established and strong, and agreeing that the information available supported the
Trustee’s conclusions. Therefore the Trustee Board continues to believe the covenant is
strong, providing reasonable comfort that the Company can and will make the necessary
cash contributions to the Fund.
Paul Spencer, formerly the Independent Trustee Director
Coming from outside the Company and with their experience of other funds,
an independent trustee can provide a different and sometimes challenging
perspective in many key areas, including covenant strength, funding and
investment strategy. The importance of this has increased as the requirements
on all trustees have grown in recent years. I have been working as the Independent
Trustee Director of the Fund for the past three and a half years and am now handing over
to Michael Wrobel, who has a wealth of pension fund investment experience as well as
experience as a Trustee Director which he can bring to the Board. I am now moving on to
face fresh challenges but I am really pleased that the management and future of the Fund
is in great shape.
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